economy – Lodginghttp://lodgingmagazine.com
Official Publication of the AH&LAWed, 13 Dec 2017 18:42:28 +0000en-UShourly1https://wordpress.org/?v=4.9.1Study: Tax Reform Could Boost Hotel Industry by $131.7 Billionhttp://lodgingmagazine.com/study-tax-reform-could-boost-hotel-industry-by-131-7-billion/
http://lodgingmagazine.com/study-tax-reform-could-boost-hotel-industry-by-131-7-billion/#respondThu, 09 Nov 2017 20:30:12 +0000http://lodgingmagazine.com/?p=34177WASHINGTON–As tax reform legislation moves through Congress, a new economic impact study found that tax cuts could generate $131.7 billion in economic activity for hotels and related industries over the next 10 years. On behalf of the American Hotel & Lodging Association (AHLA), Oxford Economics analyzed the impact of tax policy changes that would result in a tax cut of $1.5 trillion over 10 years, which they believe will cause real GDP growth to accelerate to ...

]]>WASHINGTON–As tax reform legislation moves through Congress, a new economic impact study found that tax cuts could generate $131.7 billion in economic activity for hotels and related industries over the next 10 years. On behalf of the American Hotel & Lodging Association (AHLA), Oxford Economics analyzed the impact of tax policy changes that would result in a tax cut of $1.5 trillion over 10 years, which they believe will cause real GDP growth to accelerate to 3.0 percent in 2018.

The results show that tax cuts will stimulate the economy and are expected to generate a boost to hotel industry operations, cause additional guest spending at restaurants and stores in the travel destination, and increase hotel capital investment.

“With tax reform moving through Congress and becoming closer to a reality, we are pleased to see the potential for significant financial benefits to the industry, and the U.S. economy,” said Katherine Lugar, president and CEO of AHLA. “From hotel operations, to our industry’s employees, to consumers enjoying their favorite travel destinations, tax reform enables further opportunity for financial growth and prosperity.”

Under this tax cut scenario, consumer and business travel are both expected to increase. Direct hotel guest spending, both onsite and through ancillary spending such as local restaurants, stores, and attractions, would be $57 billion higher over the next five years.

To meet this increased demand, businesses would hire new employees and add more shifts for existing ones, and increase their capital investment. This would generate $22.3 billion in additional wages and salaries for U.S. workers—equivalent to the annual compensation of 94,700 employees for five years. It would also increase state and local tax revenues by $3.9 billion. The total economic impact of this tax scenario is projected to be $131.7 billion.

Lugar praised Congress for its commitment to reforming U.S. tax policy and creating a pro-growth tax environment that will benefit the hotel and lodging industry, its employees, and American consumers. “It’s particularly critical as three out of every five hotels in industry are made up of small businesses, many independently or family owned. Tax reform will go a long way in benefiting these individuals, as well as their employees and guests,” said Lugar.

“We are pleased Congress has taken the next step toward enacting smart and effective tax reform that will allow businesses, families, and individuals to succeed. AHLA advocates for policies that enable hotels to operate on a level playing field and that empower business growth, competitiveness and entrepreneurism. We look forward to working with Congress and the Administration before the proposal becomes law to ensure that the final details support continued growth for our industry and the broader economy.”

]]>http://lodgingmagazine.com/study-tax-reform-could-boost-hotel-industry-by-131-7-billion/feed/0The Valle Group Unveils the Treehouse Lodge in Falmouth, Mass.http://lodgingmagazine.com/the-valle-group-unveils-the-treehouse-lodge-in-falmouth-mass/
http://lodgingmagazine.com/the-valle-group-unveils-the-treehouse-lodge-in-falmouth-mass/#respondFri, 08 Sep 2017 13:05:54 +0000http://lodgingmagazine.com/?p=32928Cape Cod, Mass.-The Valle Group announced recently completed renovations to the former Sleepy Hollow Motor Inn, located on Woods Hole Road in Falmouth, Mass. The 24-room motel, built in 1959, is now called the Treehouse Lodge. The owners revamped the existing motel with a focus on the “tiny home” aesthetic, a downsized space that is simple yet efficient. In order to keep the Treehouse Lodge as one of the more affordable accommodations in the area, ...

]]>Cape Cod, Mass.-The Valle Group announced recently completed renovations to the former Sleepy Hollow Motor Inn, located on Woods Hole Road in Falmouth, Mass. The 24-room motel, built in 1959, is now called the Treehouse Lodge.

The owners revamped the existing motel with a focus on the “tiny home” aesthetic, a downsized space that is simple yet efficient. In order to keep the Treehouse Lodge as one of the more affordable accommodations in the area, no major changes were made to the building’s structure. Instead, the rooms and lobby were outfitted with new flooring, paint, and furnishings and all mechanicals, plumbing, and HVAC were updated. The bathrooms and kitchenettes were remodeled by White Wood Kitchens of Sandwich, MA. The pool at the center of the property was removed and replaced with a community garden area, complete with a custom “fire ball” by sculptor Sandra Vlock, and landscaped by Foster Creative Designs of Plymouth.

“We look forward to Treehouse Lodge becoming an icon of the Wood’s Hole community,” states Christian Valle, president of The Valle Group. “It was a great collaborative effort by all involved and The Valle Group was thrilled to be a part of it.”

]]>http://lodgingmagazine.com/the-valle-group-unveils-the-treehouse-lodge-in-falmouth-mass/feed/0A Mid-Year Update on the State of Hospitality Investmenthttp://lodgingmagazine.com/a-mid-year-update-on-the-state-of-hospitality-investment/
http://lodgingmagazine.com/a-mid-year-update-on-the-state-of-hospitality-investment/#respondThu, 10 Aug 2017 12:00:39 +0000http://lodgingmagazine.com/?p=32370The economy is not soaring by any means, despite 2.6 percent GDP growth, and after surviving the worst financial downturn since the great depression, most of us are quite content that it’s growing at all. But what does slow economic growth mean for hospitality investment? Occupancy growth, rate growth, and RevPAR growth are all good signs for hotel investment given the continued low yields available from debt markets. New hotel supply, while growing, is still ...

]]>The economy is not soaring by any means, despite 2.6 percent GDP growth, and after surviving the worst financial downturn since the great depression, most of us are quite content that it’s growing at all. But what does slow economic growth mean for hospitality investment?

Occupancy growth, rate growth, and RevPAR growth are all good signs for hotel investment given the continued low yields available from debt markets. New hotel supply, while growing, is still well within anticipated demand growth. While there are pockets of overbuilding, the industry’s supply/demand balance is in good shape when taken as a whole in the U.S.

Globally, political turmoil has also dampened investor enthusiasm, but many of the more dire predictions of economic stagnation have been well off the mark. Europe continues to heal and that recovery is a solid underpinning for overall global demand. Again, slow and steady growth has been good for hotels, and solid RevPAR growth will likely continue for the foreseeable future in Europe and the UK.

Nonetheless, many critics are pointing to the all-time high levels of the stock market, which typically precede an inevitable correction or crash. However, this misses the salient point that earnings are also at all-time highs while not in a period of extreme growth. Slow growth, which is both sustainable and predictable, means lower risk, higher investor confidence, and higher earnings multiples. Couple that with low fixed-income yields, and the stock market is arguably fairly-valued. With this backdrop of investor confidence, capital continues to flow into hotels.

What could change the state of hotel investment this time? Many hotel investors assumed that the wall of commercial mortgage-backed securities (CMBS) maturity arising this year would spur an avalanche of distressed deals. Although opportunities have surfaced from this arena, these deals have been nowhere near as numerous as predicted. Moreover, the attractive debt yields and stable operating environment have made refinancing an attractive alternative to selling. Consequently, we have heard many complaints about the dearth of good investment opportunities. This phenomenon has forced investors to spread their nets wider and will clearly benefit sellers in secondary markets.

Assuming they can find an opportunity, the biggest risk for hotel investors right now would be a rapidly accelerating economy, which would force the FED to raise interest rates and, in turn, increase hotel borrowing costs. The double whammy of the resulting economic contraction coupled with higher rates could quickly put a hotel upside down on debt service coverage. Fortunately, the lending markets continue to show discipline and acquisitions are being financed conservatively. Spectacular returns are certainly hard to find, but solid returns are still quite achievable for hotel investors.

About the AuthorSteve Cesinger is a co-founder and managing partner of Valor Hospitality Partners.

]]>http://lodgingmagazine.com/a-mid-year-update-on-the-state-of-hospitality-investment/feed/0AccorHotels Brings Economy Brand ‘ibis Styles’ to the U.S.http://lodgingmagazine.com/accorhotels-brings-economy-brand-ibis-styles-to-the-u-s/
http://lodgingmagazine.com/accorhotels-brings-economy-brand-ibis-styles-to-the-u-s/#respondMon, 31 Jul 2017 13:59:15 +0000http://lodgingmagazine.com/?p=32182NEW YORK—AccorHotels ‘ibis Styles’ economy brand has made its debut in the United States with the opening of ibis Styles New York LaGuardia Airport. The opening is part of the global hospitality group’s continued expansion of its economy hotel brands worldwide. The U.S. flagship property is located on the site of the former LaGuardia Airport Hotel in a property that has undergone a major renovation. The ibis Styles brand caters to both leisure and business travelers seeking a satisfying, comfortable, ...

]]>NEW YORK—AccorHotels ‘ibis Styles’ economy brand has made its debut in the United States with the opening of ibis Styles New York LaGuardia Airport. The opening is part of the global hospitality group’s continued expansion of its economy hotel brands worldwide. The U.S. flagship property is located on the site of the former LaGuardia Airport Hotel in a property that has undergone a major renovation. The ibis Styles brand caters to both leisure and business travelers seeking a satisfying, comfortable, and distinctive guest experience that plays off the hotel’s local culture.

“As the AccorHotels portfolio grows in North America, I am very proud to announce the first ibis Styles hotel in the United States,” said Kevin Frid, COO of AccorHotels in North and Central America. “ibis Styles has already seen much success in Europe and South America, and we anticipate the brand to be a standout in New York as well.”

Located just across Grand Central Parkway from LaGuardia Airport, the 93-room hotel is inspired by the New York City Subway, with in-wall lobby seating, throw pillows, and artwork the take cues from the colorful emblems, stations, and route maps found throughout underground transit. Guestrooms are inspired by different subway lines—green, yellow, red, and blue—with furniture suited to contemporary lifestyles, including 26-inch HD LED televisions, desk areas, walls decorated with subway maps, and the brand’s proprietary bedding concept, which includes a fluffy topper, white duvet, and microfiber pillows. Authentic street-inspired snacks served are available at the hotel’s Metrocard Lounge. The hotel also offers NYC Subway card packages.

The hotel caters to both business and leisure travelers with high-speed internet and a location close to the airport and transit to Manhattan. The hotel also caters to families with complimentary breakfast to children and by providing complimentary baby-care items such as high chairs, bottle warmers, and folding cribs upon request.

The ibis Styles brand, which is part of AccorHotels’ ibis brand family, has 369 mid-size hotels across 36 countries, with plans to open seven new ibis hotels in the Americas, specifically Mexico, in 2017 and 2018.

]]>http://lodgingmagazine.com/accorhotels-brings-economy-brand-ibis-styles-to-the-u-s/feed/0Economic Insights from Hunter Hotel Investment Conferencehttp://lodgingmagazine.com/economic-insights-from-hunter-hotel-investment-conference/
http://lodgingmagazine.com/economic-insights-from-hunter-hotel-investment-conference/#respondTue, 30 May 2017 13:00:21 +0000http://lodgingmagazine.com/?p=31100At the Hunter Hotel Investment Conference, hotel executives talked about the factors that impact the U.S. travel industry. Here are their thoughts: “Travel is, I think from a global perspective, something like 10 percent of the world’s exports. We in the U.S. obviously want our fair share of [global travelers]. We have to make sure that we always have a welcome mat out front.” Liam Brown President, Franchising, Owner Services, and MxM Select Brands, North ...

]]>At the Hunter Hotel Investment Conference, hotel executives talked about the factors that impact the U.S. travel industry. Here are their thoughts:

“Travel is, I think from a global perspective, something like 10 percent of the world’s exports. We in the U.S. obviously want our fair share of [global travelers]. We have to make sure that we always have a welcome mat out front.”

“What I [have] found is that the markets differ greatly. We can’t lump all of the U.S. together and say, ‘Oh, it’s behaving this way
or that way.’”

David Kong
CEO, Best Western

“When people are feeling good about themselves, when people are feeling good about the economy, good about their future, they tend to be more willing to spend money and more willing to make investments… I am hoping that starts to carry through.”

]]>http://lodgingmagazine.com/economic-insights-from-hunter-hotel-investment-conference/feed/0AHLA Urges Congress to Support Brand USAhttp://lodgingmagazine.com/ahla-urges-congress-to-support-brand-usa/
http://lodgingmagazine.com/ahla-urges-congress-to-support-brand-usa/#commentsTue, 23 May 2017 19:00:09 +0000http://lodgingmagazine.com/?p=31032Citing that the program drives $21 billion in business sales and 2 million jobs, the American Hotel & Lodging Association (AHLA) on Tuesday urged Congress to support Brand USA, a public-private partnership that promotes international travel to the U.S. “Travel and tourism is a critical driver of the U.S. economy, generating $2.3 trillion in economic output and responsible for one in nine American jobs. That’s why we are concerned that the Administration’s budget proposal eliminates ...

]]>Citing that the program drives $21 billion in business sales and 2 million jobs, the American Hotel & Lodging Association (AHLA) on Tuesday urged Congress to support Brand USA, a public-private partnership that promotes international travel to the U.S.

“Travel and tourism is a critical driver of the U.S. economy, generating $2.3 trillion in economic output and responsible for one in nine American jobs. That’s why we are concerned that the Administration’s budget proposal eliminates federal funding for Brand USA, a public-private partnership that has been a catalyst responsible for driving more than 4.4 million incremental international visitors to the U.S. and supports thousands of American jobs,” said Katherine Lugar, AHLA president and CEO.

The program was created by Congress in 2010, began operating in 2011, and has had bi-partisan support. Funded through visa fees every year, Congress voted in 2014 to reauthorize the program until 2020. Last year alone, Brand USA’s marketing efforts resulted in more than 1 million additional U.S. visitors and $4.1 billion in visitor spending.

Lugar commented further: “In the last several years, Brand USA has been a powerful force in providing America with a competitive edge and has served as a highly successful promotional program attracting millions of visitors from countries near and far. The program boosts the U.S. economy as Brand USA results in nearly $32 billion in total economic impact, contributes nearly $4 billion in federal, state, and local taxes, and supports an average of nearly 50,000 incremental jobs a year—jobs that cannot be exported and which extend well beyond the travel industry.”

Lugar continued: “The program has had long-lasting and overwhelming bipartisan support in Congress, across all travel sectors. With travel season upon us, it is important for lawmakers to understand the benefits of this program. We need Brand USA’s strong marketing message to remind visitors that the U.S. is open for business.

“As the economy picks up steam, now is the time to ensure the vital economic contributions made by the tourism industry to the nation’s GDP remain strong. We look forward to actively engaging with both key officials in the Administration and Congressional leaders on Capitol Hill to encourage them to keep Brand USA intact and ensure certainty and economic stability,” Lugar concluded.

]]>http://lodgingmagazine.com/ahla-urges-congress-to-support-brand-usa/feed/1Red Roof PLUS+ Aims to Bring Consistency to Economyhttp://lodgingmagazine.com/red-roof-plus-aims-to-bring-consistency-to-economy/
http://lodgingmagazine.com/red-roof-plus-aims-to-bring-consistency-to-economy/#respondTue, 23 May 2017 12:37:02 +0000http://lodgingmagazine.com/?p=30988Red Roof CEO Andy Alexander knows a thing or two about TripAdvisor reviews. About 25,000 of them are delivered to his phone each year, he says. The website’s user reviews help many economy and midscale travelers determine where to book. Alexander says if you look closer, the reviews also reveal drastic inconsistencies in quality among economy properties, even those within the same brand. “There’s a space between midscale and economy properties big enough that you could drive a ...

]]>Red Roof CEO Andy Alexander knows a thing or two about TripAdvisor reviews. About 25,000 of them are delivered to his phone each year, he says. The website’s user reviews help many economy and midscale travelers determine where to book. Alexander says if you look closer, the reviews also reveal drastic inconsistencies in quality among economy properties, even those within the same brand.

“There’s a space between midscale and economy properties big enough that you could drive a truck through it,” Alexander explains. That space is what Red Roof has defined as the “upscale economy”—and it’s a void the company is looking to fill with its brand expansion, Red Roof PLUS+. In the years since its 2013 rollout, Red Roof PLUS+ has grown to make up about 10 percent of Red Roof’s total portfolio.

The PLUS+ concept started brewing well before its official launch. In 2010, Red Roof’s Columbus Hotel underwent a floor-by-floor interior renovation. After one floor was complete, the company would ask guests for feedback, and implement the suggestions in the next floor. After six floors, the end design featured more outlets, higher-quality bedding and furniture, faux-wood vinyl flooring, and spa-style bathrooms.

Upscale economy brands are responding to these kinds of consumer demands by pushing the economy segment into midscale, Alexander says. Several economy brands have taken note, adding amenities or upgrading guestroom design. Red Roof postures that PLUS+ goes beyond introducing more midscale amenities at some properties. The PLUS+ brand is aiming for guaranteed consistency between properties to clearly define the upscale economy category to consumers.

“There’s no reason why the economy segment should be as inconsistent as it is,” Alexander explains. “The PLUS+ brand has ultimate consistency, and assures guests that they’re going to get the exact same clean, comfortable room at every property.”

Red Roof is aggressively occupying this niche. At the end of 2016, when the company celebrated its 500th U.S. hotel opening, it also crossed the threshold for its 50th PLUS+ property. Red Roof is building towards having PLUS+ account for as much as 20 percent of the total Red Roof brand. Franchisees are also getting onboard with the push, Alexander says, attracted to the opportunity for higher ADRs in an economy market.

“The percentage of franchisees interested in plus has certainly increased over the last couple years as they’ve seen the success of the brand,” Alexander says. “And with ADRs getting towards the upper $70s, they’re liking the ability to have an economy brand that delivers midscale results.”

PLUS+ properties are typically located in higher ADR markets— Raleigh, San Antonio, Austin, Atlanta, Baltimore, Philadelphia, and Pittsburgh, to name a few. The company continues to expand nationwide and internationally—it opened its first PLUS+ property in Japan last summer.

Aside from PLUS+, Red Roof’s big push is for “Fast. Free. Verified. WiFi.” Through the program, an independent third-party is commissioned to confirm that WiFi is capable of in-room video streaming for every guest concurrently. A total of 120 Red Roof properties are verified under the program. The company moved to implement a verified WiFi after guest surveys showed a strong preference for free, working WiFi over other amenities, such as a free breakfast. Alexander adds, “That’s how we look at everything we do—we test, see if the guests truly want it, then we move forward assuming they do.”

]]>http://lodgingmagazine.com/red-roof-plus-aims-to-bring-consistency-to-economy/feed/0Hotel Construction Pipeline Continues Moderate Growthhttp://lodgingmagazine.com/hotel-construction-pipeline-continues-moderate-growth/
http://lodgingmagazine.com/hotel-construction-pipeline-continues-moderate-growth/#respondThu, 11 May 2017 13:00:07 +0000http://lodgingmagazine.com/?p=30781PORTSMOUTH, N.H.—Lodging Econometrics reports that the Q1 2017 United States construction pipeline currently stands at 5,032 projects/602,034 rooms, up 13 percent by projects year-over-year (YOY). There are 1,511 projects/197,450 rooms under construction, up by 155 projects YOY or 11 percent. Projects scheduled to start in the next 12 months, at 2,414 projects/272,487 rooms, were up 367 projects, 18 percent. Projects in early planning at 1,107 projects/132,097 rooms were up by 39 projects or 4 percent. ...

]]>PORTSMOUTH, N.H.—Lodging Econometrics reports that the Q1 2017 United States construction pipeline currently stands at 5,032 projects/602,034 rooms, up 13 percent by projects year-over-year (YOY). There are 1,511 projects/197,450 rooms under construction, up by 155 projects YOY or 11 percent. Projects scheduled to start in the next 12 months, at 2,414 projects/272,487 rooms, were up 367 projects, 18 percent. Projects in early planning at 1,107 projects/132,097 rooms were up by 39 projects or 4 percent.

This is the 21st consecutive quarter of growth, but the pipeline is still a distant 851 projects/183,513 rooms away from the Q2 2008 peak of 5,883 projects/785,547 rooms. This moderate pipeline growth can be attributed to the tightening of loan availability, the recent rise of interest rates with the expectation of more increases on the horizon, and a slowing economy near full employment.

]]>http://lodgingmagazine.com/hotel-construction-pipeline-continues-moderate-growth/feed/0Economy Chains Face Lack of Demandhttp://lodgingmagazine.com/economy-chains-face-lack-of-demand/
http://lodgingmagazine.com/economy-chains-face-lack-of-demand/#respondFri, 18 Nov 2016 15:07:07 +0000http://lodgingmagazine.com/?p=28320In the rapidly expanding room pipeline of the U.S. hotel industry, one segment seems to have fallen out of favor with developers. In June 2016, STR counted 166,000 rooms under construction. However, only 1,000 of these rooms were in the economy segment, which, as defined by STR, is comprised of 44 brands. These properties are mostly smaller with an average room count around 75. Economy ADR is on the low side at $59. Average annual ...

]]>In the rapidly expanding room pipeline of the U.S. hotel industry, one segment seems to have fallen out of favor with developers. In June 2016, STR counted 166,000 rooms under construction. However, only 1,000 of these rooms were in the economy segment, which, as defined by STR, is comprised of 44 brands. These properties are mostly smaller with an average room count around 75. Economy ADR is on the low side at $59. Average annual occupancy for the segment since 2000 has only been around 55 percent, and so far this year economy occupancy has been at 57 percent.

Of course, it should be kept in mind that this segment is not immune to the swings of the macroeconomic environment. This was clearly seen in 2009 when STR recorded an occupancy of only 48.5 percent of all rooms sold, meaning that half the economy inventory stood empty for the year. Fortunately, these numbers have rebounded, but for the segment as a whole we have never reported occupancy of over 60 percent.

The underlying fundamentals of supply and demand echo the story of a somewhat stagnant sector. The average demand increase since 2000 has been only 0.3 percent. In all other scales this would spell trouble. However, in the economy segment, the supply growth has been only 0.3 percent, effectually showing no occupancy growth over a 16-year period. The year-to-date number of rooms sold increased slightly from approximately 77 million in June 2000 to approximately 80 million June 2016. At the same time, the number of economy hotels grew from 9,200 to approximately 10,200, a very small increase given the 16-year time span.

Historically, the performance metrics for the economy sector have been much stronger on weekends versus weekdays. Through June 2016, the weekday occupancy was only 53.7 percent, whereas we reported a 63.5 percent weekend occupancy. Granted, the weekday averages are reduced by the Sunday occupancy performance of only 49.1 percent. The markedly better weekend performance is also mirrored in the weekend ADR premium of $7. The average room on a weekday costs $57, versus $65 on a weekend.

In the long run, the economy segment ADR increase has hardly kept pace with inflation. In 2000, rooms were sold for $47.54 with a relatively low increase to $58.78 in 2015. The average ADR increase over this period was just 1.5 percent. As discussed earlier, because of the lack of occupancy growth, RevPAR only increased 1.6 percent on average. For the United States, that average annual increase was 2.9 percent.

Monitoring this segment’s performance should be interesting over the next three to five years. Changing customer preferences and property renovations and updates provide a real opportunity to capture the quality and price-conscious consumer. Conversely, as customers trade up to new midscale product, economy properties and brands in need of a refresh will be left behind.

]]>http://lodgingmagazine.com/economy-chains-face-lack-of-demand/feed/0U.S. Economy Grew 1.2 Percent in Q2http://lodgingmagazine.com/u-s-economy-grew-1-2-percent-in-q2/
http://lodgingmagazine.com/u-s-economy-grew-1-2-percent-in-q2/#respondFri, 29 Jul 2016 15:06:04 +0000http://lodgingmagazine.com/?p=26563In the second quarter of 2016, the U.S. economy expanded less than anticipated at 1.2 percent. Economists initially predicted a 2.5 percent increase. However, Fed policymakers, who left interest rates unchanged earlier this week, said risks to the U.S. outlook have diminished. To read more, click here.

]]>In the second quarter of 2016, the U.S. economy expanded less than anticipated at 1.2 percent. Economists initially predicted a 2.5 percent increase. However, Fed policymakers, who left interest rates unchanged earlier this week, said risks to the U.S. outlook have diminished. To read more, click here.